In economic theory, the major factor that influences household consumption is the household disposable income as postulated in the consumption function. This study is aimed to find out whether the theoretical justification in economics that household consumption affects the disposable income is evident or are there any macroeconomic factors that influence the household consumption in the Philippine case using the Two-Stage Least Squares (2SLS). Results of this study proved that based on the economic theory household consumption is affected by the household disposable income in the Philippine case. Moreover, the disposable personal income can be proxied by the macroeconomic variables affecting the household final consumption expenditure such as unemployment rate, population growth, government expenditure rate, interest rate, and inflation rate.

Keywords : Disposable Personal Income; Household Final Consumption Expenditure; Macroeconomic Variables; TwoStage Least Squares (2SLS)